With this new acquisition, will we see Mr. Michaels apply his trademark tactics on these once dominant, local media giants? We certainly think so.

That’s why we’re going to dial up the way-back machine, and recall how Randy moved in and revamped the Tribune Company a few short years ago. Here’s my post from back then:

Randy Michaels had a plan. The former chief of Tribune would convert the stumbling newspaper and broadcast giant into a media and marketing company. A company that just so happened to own printing presses and broadcast towers. And the only way to accomplish this, was to first transform the company’s deeply rooted and stodgy culture. They had to think and act differently if they were to beat back the local threat of AOL, Google and other online pure-plays. Randy knew that digital would play a major role in this transformation, much like it did in previous makeovers the ex-DJ spearheaded in his past.

The attempted Trib-culture makeover had mixed results. Some, like embedding radio vets into the ranks certainly ruffled feathers. Many of these so-called ‘Randy hires’ are no longer with the company; Lee Abrams, Marc Chase, Jeff ‘Booger’ Kapugi, Kim Johnson, and John Martin. Other new-culture infusions went over a bit better: removal of redundant positions and activities, hybrid sales teams and smarter newspaper production techniques.

Like him or not for some of the recent accusations, Randy has an enviable track record of smartly using digital tech for innovation in media. His early work with radio voice-tracking around 1996, (ex: seasoned DJ in Miami being pumped into Peoria) was hated by 3rd tier on-air talent that were quickly canned by these so-called robo-jocks. But station management and investors loved this cost-cutting tool. Cash-strapped managers saw voice-tracking as a simple and affordable way to have major market talent on their small market stations. The quick expansion of NYC based Howard Stern affiliates is another example of how operators like Infinity/CBS and Mel Karmazin leveraged emerging technology.

Michael’s take over of Tribune with financier Sam Zell shows similar digital thinking and strategy being applied to the Chicago based company. Take a look at this 5 minute video clip (from almost 2 years ago) that highlights a speech given to employees of The Morning Call, Trib’s print operation just outside of Philadelphia. After all this time, the talk is still accurate and relevant. Unfortunately, some of what Randy wanted the staff to embrace and execute either fell on deaf ears, or was sloppily executed at the local level.

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Can great online editorial survive without a strong sales effort?

Mr. Curley; head of interactive for Greenspun Digital, is arguably one of the best content developers on the planet.

So what happens when a sales effort struggles to turn that superior editorial into cash?

Some questions we asked Rob, in front of a room full of newspaper executives:

• How long can ownership take that loss?
• Can a Rob Curley strategy survive in a newspaper company with limited funds?
• Why does Rob go on so many sales calls? Is the sales team not strong enough?
• Is new business development and local sales skill a strong suit of the Las Vegas Sun?
• Is there a common thread to be found from his recent time at the Washington Post and Naple News?

Here’s the slide deck from the session called ‘Digital Cage Match’; Mel Taylor vs. Rob Curley from the Las Vegas Sun.

 
Mel Taylor vs. Rob Curley: Digital Cage Match

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Here’s a peek at the latest keynote speech I’m preparing to deliver.

Each year, we throw capital and manpower at the insatiable beast known as the Internet. Usually with crappy results. We’re now forced to take a much closer look at the digital ROI of our newspapers, management teams, and the feasibility of some questionable, interactive business plans.

Public/private equity ( Alden Global Capital ) and owner/operators have grave concerns about two newspaper issues: their limited success with digital revenue, and the rapid growth and lofty valuations of Huffington Post, Groupon, Reach Local and Patch. Making matters worse, these new players are going after the same budgets that newspapers have gorged and relied on for decades.

This eye-opening session is not about online sales tips & editorial tricks. It’s not a ‘future is bright if we only change’ lecture. Rather, we call out the 800 lb. elephant in the room: why don’t we run our websites like our print business? ( where profit, margins and realistic tactics always come first )

Mel Taylor Media has first-hand knowledge of these issues, and the specific fixes that should be considered and applied. Mel Taylor has spent over 15 years working with both traditional media and online-only ventures, in their pursuit of building a profitable, online business. Mel’s ability to clearly communicate the issues and actionable remedies will make this session immediately valuable to all who attend.

Analysis & recommendation delivered in framework that will resonate with:

• Publishers, owner / operators, COO, CEO, CFO’s
• Financial institutions, private & public equity, industry analysts

Session also provides insight and specific recommendation about:

• Determining digital asset valuations when buying or selling a media property
• Is my property operating efficiently as possible?
• Low cost & no cost technologies/tactics to consider.
• Why, when and how to outsource & automate
• Buy, build or partner? Mergers & acquisitions. The digital media roll-up is on!
• What’s better — being an aggregator or aggregatee? Paywall pros & cons
• Financial benefits of a ‘digital first’ strategy & employee culture
• Is your VP of Digital primarily focused on profitability or page views?
• Potential legal implications of aggregation, search, and fair use
• Workflow, management & compensation. Breaking common chokepoints
• Overview of key competitors going after local advertising budgets

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Sustainable Revenue Platform for Online News 8.30.2010

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Traditional Media Struggles w/ Web Revenue 9.10

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All is not lost. Even though the local competition continues to grow stronger, Broadcasters and Newspaper can still get back in the game, and significantly grow their web & overall revenue share.

The solution is simple and indisputable: address and remedy the common web sales errors committed by most local media properties. The list below captures and identifies what we refer to as: the 800 lb. gorilla in the room.

1. Top management & owners need specialized web training. How can you manage what you don’t fully understand? Expensive research and consultants are not enough. Delegating sales strategy to a content & tech focused VP of Interactive or Internet manager is risky without knowledgeable oversight.

2. Dangerous thinking: ‘selling web cannibalizes traditional sales’. It’s crazy to think that these words are still being uttered. If those in charge would prefer to focus on their core product, that’s fine. If these managers believe that “web revenue is small, so let’s ignore it”….that’s fine too. But at the end of the day, if you’re not going run your web assets like a profit-first business…then why even have a digital initiative in the first place? Advertisers are moving more ad dollars to online. They can buy web from your reps, or someone else. While web revenue is still relatively small, it is the fastest growing revenue stream. At the very least, local media should focus on growing its overall revenue share, by smartly leveraging its digital assets.

3. Limited web training of sales reps. How can they sell new products without seasoned direction & regular training? Is your staff taught by qualified web-sales trainers, or by a ‘web-geek’? Is your staff forced to endure theory & classroom lecture, or are they getting real world training by being taught in the field? Local media needs to look outside of the industry for fresh and seasoned perspective on web sales. Be wary of training from those who do not have recent local/direct, web sales experience.

4. Management structure conflicts. Conflict #1: Web managers report to traditional managers whose compensation package favors spot or total sales. This may be one of the most critical choke-points of growing online revenue. Where do you think traditional managers will place most of their efforts? Conflict #2: Programming/editorial departments are primary operators of most websites, including where and how advertising is placed. If you would never allow the PD or editor determine your on-air spot load or ad volume, why do you allow them to determine online units and placements on the website? Just like your Radio station or Newspaper, the website must be ultimately run by those with ‘web profit & revenue first’ goals.

5. Poor attention to fast changing, online environment. Traditional media execs typically follow other traditional media execs for determining digital plans. Some harshly suggest it’s the blind leading the blind. with slipping shares of  local online revenue, it might be best to also look outside the industry for best practices in web sales. New competitors like Patch, Reach Local and Groupon are ramping up their local staffs, and are going after the budgets in your own backyard. Is your team familiar with these new players and their sales plan? How do you keep up? Do you have a plan to thwart these new competitors? One way to win is to provide Web 101 workshops to local advertisers. By taking an educational approach with clients, they’re more likely to rely on you for all of their marketing needs, and not some outsider.

6. Setting web budgets too low. This little sleight of hand allows your sales staff to quickly hit web goals. Once hit, they can push down web sales to a lower priority. In this situation, money is left on the table and gives corporate management the false impression of successful, local web selling. Making matters worse, this encourages the remaining local web budgets to be redirected to online-only companies. The only thing worse than this is the foolish trick of reps converting portions of the traditional buy to web, thereby teaching clients that web should always be viewed as a value-add.

7. In-effective inventory & yield management. Nothing says poor web-sales management than seeing a lame Google AD Sense or network ad on your home page. Geez, you can’t sell your most valuable, most powerful ad unit to a local sponsor? That’s like always placing per inquiry or PSA’s in your 7:20 stop set on a Monday morning. If more than 20% of your available web inventory is sold to 3^rd party ad networks…your local sales strategy needs to undergo a crisis intervention…now.

8. Confusing media kits, sales packages & pricing. Local business owners prefer simple offers, delivered using advertiser-friendly vocabulary. They’re usually not sure of the value of 1 or even 10 million page-views. Excel spreadsheets with ad units, cpm’s and other confusing data only frustrates the advertiser. It also freaks out the sales rep who’s trying to clearly explain the features & benefits of a cross-platform marketing program. Simplicity is always best.

9. Director of Interactive; tech & content background only? Too few Interactive VP’s and web managers are qualified to implement a realistic revenue strategy. While building slick sites and driving eyeballs are quite important, these skills do not equal revenue & profit. Suggestion: hire a corporate VP of Interactive Revenue that reports directly to the CEO. Bonus all applicable staff based on web profit, not web traffic.

10. Over-reliance on vendors & research for sales strategy. Just because I sold you a beautiful kitchen & gave you the best cookbooks, doesn’t mean that you’re now a master chef !

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In Sacramento, the local newspaper finally woke up to the fact that a hyper-local network; SLOAN, was gaining advertiser and reader support in their own backyard. So now the city has it’s second local ad network: SacramentoConnect, courtesy of the Sacramento Bee.

Below is updated overview of the Hyper-local plan we’re following, that is showing early signs of success.

New sections include:

• Should I partner with the local Newspaper?
• Should I work for Patch?

HyperLocal News.Incubator UPDATED 8.3.2010

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The early days of Newspaper giants such as James Gordon Bennett, E.W. Scripps and Joseph Pulitzer offered many clues that confirmed one of our earliest theories. (Hat tip to Howard Owens at The Batavian.com) These men were first and foremost, entrepreneurs and sales men. They clearly understood the need for immediate cash flow to support their journalistic efforts. They experimented with new technologies of the day, slaughtered a few sacred cows, and did whatever possible to quickly build a Newspaper business model that was self-sustaining, scalable, and NOT primarily supported by subscribers and donations.

Recently, we were approached by a group of investors looking to conduct a study on potential opportunities in the local online space. Of course they wanted intelligence on websites that showed significant editorial or traffic gains, as well as trends in local advertiser spend. But more importantly, they wanted a deeper look into the eco-system, projects & trajectories that could be considered un-discovered gems of ‘value creation’. In other words, projects of community interest that were combined with content, functionality, management teams & revenue potential…..worthy of investment.

Some findings of note:

1. Out of 50 sites and companies that were in the study, only 6 were run by an executive, journalist, or Interactive VP with any significant sales or revenue focused background.
2. A whopping 90% of sites we studied, primarily structured their web model from an editorial & technical perspective, with minimal revenue strategy baked in from the beginning. These sites combine technology & journalism to build readership traffic, which would then presumably attract advertisers. Advertiser support for these efforts were either limited or non-existent.
3. Most sites are captained by journalists, pro-am bloggers, or executives with similar characteristics. Most came up through the newsroom, editorial/programming departments, or imported from Internet pure-plays
4. Major sites run by larger organizations had a cadre of advisors and consultants that were intellectually seasoned and arguably first rate. Their board of directors were chock full of academics, journalists, futurists and research consultants. Yet, less than 10% of the sites we studied, had an advisor or board member with actual sales experience.

Initial recommendations from this study

1. “Build it and they will come”  no longer works as well as it used to. Revenue needs to be primary consideration.
2. Beware of using faulty data & research from sources with limited hands-on experience with ad community.
3. The retro-fitting of revenue tactics into an online news model after reader traffic has been established, is an increasingly flawed strategy that is blindly followed by far too many online operations. While online news sites certainly must have smart editorial & content focused executives, our research strongly suggests the importance of placing a revenue focused exec, side by side with editorial, in order to work con-currently on the challenge.

Part 2 & 3 of this report includes greater detail and recommendation. Please email us for details.

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